By Mike Nichols
Mayor, Solana Beach
A down global and national economy, coupled with a severe fiscal meltdown at the state level, are creating a "Perfect Storm" that may finally be reaching our shores in Solana Beach, and hitting hard. This storm is causing us to rethink the way we budget our finances and generate revenues to pay for essential city services.
To date, our general fund revenues are down nearly $1 million from last year. The Solana Beach City Council has been working hard developing strategies to ensure that quality of life and levels of service in Solana Beach are maintained. So far, we've been able to make significant budget cuts and postpone projects to compensate for reduced revenues and weather the current bad economic climate. But these budget cuts and project delays are not sustainable. To make matters worse, the efforts we've made so far may be washed out due the fiscal tsunami generated by the state.
It appears the state is set to "borrow" property tax dollars from all cities, counties and special districts to combat their $21 billion deficit. If this occurs, Solana Beach will lose more than $560,000 in property tax revenue, on top of our General Fund shortfalls. Additional withholdings from the state could total more than $470,000, bringing our city's total revenue losses near $2 million. Keep in mind, our annual general fund budget is typically $14 million; so these reductions are quite significant.
To address the changing economy and the long-term fiscal health of our city, structural changes to enhance our revenue generation are being considered. One proposal under consideration is a business tax. A vast majority of cities in California employ some type of tax (or permit) on businesses to help offset costs of city services, infrastructure and resources these businesses utilize to operate within city limits. Of course, any form of business tax that would be proposed would require approval through a public vote.
The economy has drastically changed and new challenges are being faced everyday to keep essential city services, such as fire protection, public safety and public works, available to our citizens at the levels that meet our needs. The City Council will continue to do its best to ensure that services will continue to be provided even in these tough economic times that we all are experiencing.